Financial Accounts of the United States - Z.1

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For more information about the Z.1 Financial Accounts of the United States, please see our interactive Financial Accounts Guide.

This page provides additional information about data in the Board of Governors' statistical release on the Financial Accounts of the United States (Z.1). Most of the information is of a technical nature and represents answers to questions that may be of interest to a range of analysts and researchers. The page will be updated as such questions arise.

How does the coverage of private depository institutions in the Z.1 Financial Accounts of the United States statistical release (Z.1) align with the coverage of banks in the H.8 Assets and Liabilities of Commercial Banks in the United States release?

What tables were reordered and renumbered in the September 8, 2023 release of the Z.1 Financial Accounts of the United States?

Why were the Distributional Financial Accounts data revised for the 2023:Q1 publication?

Why did seasonally adjusted annual rate transactions on Treasury debt held by the public revise?

How can data from the discontinued Mortgage Debt Outstanding table be accessed via the Financial Accounts of the United States?

The DFAs provide the total wealth for all households in a given group. How many households are in each group, and how do I get the average level of assets, liabilities, and net worth for each household?

Where do loans extended under the Paycheck Protection Program appear in the Financial Accounts?

What are PPP payables and receivables and how are they treated in the Financial Accounts??

How do the data in the Z.1 Balance Sheet of Domestic Hedge Funds table (B.101.f) differ from the Private Fund Statistics published by the Securities and Exchange Commission (SEC)?

Does the Z.1 Balance Sheet of Domestic Hedge Funds table (B.101.f) include the whole universe of U.S. hedge funds?

Smaller hedge funds (non-qualifying hedge funds) file Form PF annually and are not required to disclose as much detail on their asset and liability sides as larger hedge funds (qualifying hedge funds). How do the non-qualifying hedge funds enter the Z.1 hedge funds table?

The asset side information of the Z.1 hedge funds table comes from Questions 26 and 30 of Form PF. For some asset categories, for example U.S. Treasury securities, the long exposure reported in Questions 26 and 30 includes the hedge fund's direct holding of the security but also the derivative exposure. Does the asset side in the Z.1 hedge funds table include derivative exposure?

Why did the net worth of the nonfinancial corporate business sector revise significantly downward with the 2019:Q2 publication?

Why did the State and Local defined benefit pension entitlements (liabilities) and claims of pension fund on sponsor (assets) dramatically revise up with the September 2018 release?

Why did the level of foreign loans to U.S. corporate business almost double in 2018:Q2?

Where can I find a list with all of the series that were added or renamed in the September 2018 Z1 release?

What are the effects of the Tax Cuts and Jobs Act (TCJA) on the Financial Accounts' transactions?

Why is there a large increase in total municipal securities outstanding in 2004:Q1?

Why was nonfinancial closely held corporate business equity revised by approximately -160B for each quarter between 2016Q4 and 2017Q3?

How are exchange traded funds (ETFs), closed-end funds (CEFs), and real estate investment trusts (REITs) treated in the Financial Accounts of the United States?

If Exchange-traded fund (ETF) shares are included in total issues of corporate equities shown on line 1 of L.223, are the underlying equity shares held by ETF companies being double counted; once for the issuance of the underlying equity shares and once again for the issuance of ETF shares? What about on the holdings side?

What were the revisions to the mutual fund sector introduced with the June 9, 2016 release of the Z.1 Financial Accounts of the United States?

Why were debt securities held by mutual funds revised down by such a large amount in the June 9, 2016 release of the Z.1 Financial Accounts of the United States?

Did the mutual fund sector revisions in the June 9, 2016 release of the Z.1 Financial Accounts of the United States affect other sectors?

Data on large publicly traded corporations indicate that their debt growth from 2011 onwards has been much larger than that of the nonfinancial business sector. Can you help explain this gap?

Why is the discrepancy so large for Monetary Authority in 2015:Q4?

Why is the level of total debt outstanding in the September 18, 2015 release of the Z.1 Financial Accounts of the United States so much higher than it was in the previous Z.1 release?

In the September 18, 2015 release of the Z.1 Financial Accounts of the United States, some tables in the summary section on credit market instruments seem to have disappeared. What happened to these tables and where can I find the equivalent data series?

Can you provide some detail on the changes in the Nonfinancial Corporate Business tables (F.102, L.102 and B.102) in the 2014 Second Quarter Z.1 publication?

When a corporate business acquires a partial ownership stake in another publicly or privately held corporation, is this operation recorded in the "other miscellaneous assets" in the flows and levels tables?

When a corporate business buys back its own equity, does the difference between the market price it pays and the historical cost appear as goodwill in the other miscellaneous assets flows and levels tables?

When a corporate business buys all the equity of another publicly or privately held corporation, how is this registered in the "net equity issuance" series in the flows table?

How do hedge fund assets of U.S. households show up on the household balance sheet in the Financial Accounts?

How is the Securities Data Corporation (SDC) bond data used to calculate series FA103163003.Q in the Flow of Funds data set? Which categories of the SDC bond data do you focus on, and what are you using as a filter?

I have been looking at the Flow of Funds report Table F.212 - Net Issues and have some questions how the SDC Bond database is used.

Q: How does the coverage of private depository institutions in the Z.1 Financial Accounts of the United States statistical release (Z.1) align with the coverage of banks in the H.8 Assets and Liabilities of Commercial Banks in the United States release?
Posted: 3/7/2024

Private depository institutions (tables F.110 and L.110) in the Z.1 include four types of depository institution subsectors: U.S.-chartered depository institutions (tables F.111 and L.111), foreign banking offices in the U.S. (tables F.112 and L.112), banks in U.S.-affiliated areas (tables F.113 and L.113), and credit unions (tables F.114 and L.114). Detailed information on the types of institutions included in each subsector are documented in the table descriptions found on the Financial Accounts Guide [https://www.federalreserve.gov/apps/fof/FOFTables.aspx].

The H.8 release provides an estimated weekly aggregate balance sheet for all commercial banks in the United States which includes both domestically chartered commercial banks and foreign-related institutions in the U.S. Detailed information on these types of banks and the sample size used for the estimate can be found on the H.8 release About page [https://www.federalreserve.gov/releases/h8/about.htm].

The key differences between the Z.1 and H.8 releases involve the types of institutions that are covered, the types of assets that are included, and the frequency of the data. Relative to the H.8, the Z.1 covers a broader array of depository institutions but includes a narrower measure of assets (financial vs. total balance sheet). In addition, the Z.1 provides data on a quarterly frequency while the H.8 provides weekly data. Additional details are provided below:

  • Differences in institutional coverage:
    • H.8 release does not include banks in U.S. territories such as Puerto Rico, which are included in the Z.1 banks in U.S.-affiliated areas subsector. Both the H.8 and the Z.1 include bank branches on U.S. military bases abroad.
    • H.8 release does not include credit unions, which are included in Z.1 credit unions subsector.
    • H.8 release does not include some groups of depository institutions that are included in the Z.1 U.S.-chartered depository institutions or foreign banking offices in the U.S. subsectors.
      • H.8 excludes thrift institutions, mutual savings banks, federal savings banks, state-chartered savings banks, cooperative banks, savings and loan associations, and international banking facilities (IBFs) established by U.S.-chartered depository institutions, which are included in the Z.1 U.S.-chartered depository institutions subsector.
      • H.8 excludes international banking facilities (IBFs) established by foreign banking offices in U.S., which are included in Z.1 foreign banking offices in the U.S. subsector.
    • H.8 weekly data are constructed from an authorized sample of 850 domestically chartered commercial banks and U.S. agencies and branches of foreign banks that respond on the weekly FR 2644 reporting form. Approximately 63 are foreign-related institutions and the rest are domestically chartered. These sample data, in conjunction with Reports of Condition and Income (Call Reports), are used to estimate the remaining domestically chartered and foreign-related commercial banks in the H.8 universe and cover about 90% of commercial bank total assets. The H.8 foreign-related bank institutions are a subset of the institutions captured in the Z.1 foreign banking offices in U.S. subsector.
    • Z.1 depository institution data are aggregated from Call Reports and do not involve estimation from a sample.
  • Differences in the asset boundary:
    • Z.1 private depository institutions tables mentioned above report financial assets and liabilities only, and do not include nonfinancial assets such as the Call Report line items premises and fixed assets, or intangible assets. Nonfinancial assets are included in the H.8 release line-item other assets including trading assets. Z.1 table L.4.s Net stocks of fixed assets, current cost reports fixed assets of private depository institutions at current cost derived from the Bureau of Economic Analysis national income and product accounts (NIPA) and fixed asset accounts (FAA).
  • Differences in report timing:
    • H.8 release data are based on weekly Wednesday data from Report Form FR 2644 which may not line up with quarter-end dates. H.8 weekly data are benchmarked to the quarterly Call Reports.
    • H.8 release monthly data are computed as the prorated averages of weekly Wednesday values.
    • Z.1 private depository institutions data are from quarterly Call Reports.
  • Additional differences:
    • Z.1 levels outstanding reported on tables are not seasonally adjusted. The H.8 reports both seasonally adjusted and not seasonally adjusted levels.
    • H.8 release line items match closely with line items on the weekly FR 2644 report form and the Call Reports. Line items on Z.1 tables F.111, L.111, F.112, and L.112 group Call Report line items into instrument categories that better align with the System of National Accounts (SNA 2008) accounting framework.
Q: What tables were reordered and renumbered in the September 8, 2023 release of the Z.1 Financial Accounts of the United States?
Posted: 9/8/2023

Transaction and level instrument tables have been reordered and renumbered beginning with F.223 and L.223, respectively, to accommodate the new "other equity" instrument tables, which align the Financial Accounts more closely with international guidelines set forth in the System of National Accounts 2008. The new and previous table references are as follows:

  • Direct investment intercompany debt is shown on tables F.223 and L.223 (previously shown on tables F.230 and L.230).
  • Corporate equities are shown on tables F.224 and L.224 (previously shown on tables F.223 and L.223).
  • Other equity is shown on tables F.225 and L.225.
  • Direct investment equity, a component of Other equity, is shown on tables F.225.a and L.225.a (previously shown on tables F.230 and L.230).
  • Miscellaneous other equity, a component of Other equity, is shown on tables F.225.b and L.225.b (proprietors? equity in noncorporate business was previously shown on tables F.229 and L.229, while the remaining line items were previously shown on tables F.232 and L.232).
  • Mutual fund shares are shown on tables F.226 and L.226 (previously shown on tables F.224 and L.224).
  • Life insurance reserves are shown on tables F.228 and L.228 (previously shown on tables F.226 and L.226).
  • Pension entitlements are shown on tables F.229 and L.229 (previously shown on tables F.227 and L.227).
  • Trade credit is shown on tables F.230 and L.230 (previously shown on tables F.225 and L.225).
  • Taxes payable by businesses are shown on tables F.231 and L.231 (previously shown on tables F.228 and L.228).
  • Total miscellaneous financial claims are shown on tables F.232 and L.232 (previously shown on tables F.231 and L.231).
  • Identified miscellaneous financial claims-part I is shown on tables F.233 and L.233 (previously shown on tables F.232 and L.232).
  • Identified miscellaneous financial claims-part II is shown on tables F.234 and L.234 (previously shown on tables F.233 and L.233).
  • Unidentified miscellaneous financial claims are show on tables F.235 and L.235 (previously shown on tables F.234 and L.234).

Note that tables F.227 and L.227 are skipped; these are reserved for the hedge fund shares instrument to be released at a later date.

Q: Why were the Distributional Financial Accounts data revised for the 2023:Q1 publication?
Posted: 6/16/2023

We continuously monitor the performance of the models used to estimate the data in the Distributional Financial Accounts. For the 2023:Q1 publication, we removed some regressors from our models, as we determined that these regressors were either redundant or generating excess quarter-to-quarter variability. The updated model implies relatively minor revisions over most of history, but results in noticeably lower estimates of wealth for the bottom half of the income and wealth distribution since 2022:Q2. In addition, the new model results exhibit less short-term volatility. The updated list of regressors is available in the public version of the DFA code. A note describing the structure of the models used by the DFA is available on our website (see Introducing the Distributional Financial Accounts of the United States).

Q: Why did seasonally adjusted annual rate transactions on Treasury debt held by the public revise?
Posted: 9/9/2022

For the September 9, 2022, Z.1 release, changes were made to the method used to estimate seasonal factors for Treasury debt held by the public (series FS313161100.Q). Treasury debt held by the public includes marketable Treasury securities as well as a comparably small amount of nonmarketable Treasury securities, such as those held in Thrift Savings Plan G Fund. The new seasonal adjustment method estimates seasonal factors from 2010:Q1 through 2019:Q4 on only marketable Treasury securities, shown on table F.210 line 2 (series FS313161205.Q), and applies the results to Treasury debt held by the public (series FS313161100.Q). Previously, the seasonal factors on marketable Treasury securities were residually impacted by large swings in nonmarketable securities transactions due to extraordinary measures used by Treasury. Seasonal factors are then extrapolated from 2020:Q1 through the current period, avoiding potential disruptions to seasonal patterns after the onset of the COVID-19 pandemic. While unadjusted transactions and annual series are unaffected, seasonally adjusted annual rate Treasury security transactions (table F.210) are revised for the Federal government sector (table F.106) and the Household and nonprofit organizations sector (table F.101). These revisions also affect seasonally adjusted measures of personal saving and derived ratios (table F.6).

Q: How can data from the discontinued Mortgage Debt Outstanding table be accessed via the Financial Accounts of the United States?
Posted: 3/4/2022

A table that provides mapping between the Financial Accounts and the discontinued Mortgage Debt Outstanding (MDO) table is available on the Federal Reserve Board webpage: https://www.federalreserve.gov/data/mortoutstand/current.htm

Full historical data from the MDO, including series designated as underlying detail, are available from 1945 (annual) and 1952 (quarterly) via the Federal Reserve Board’s data download program.

Q: The DFAs provide the total wealth for all households in a given group. How many households are in each group, and how do I get the average level of assets, liabilities, and net worth for each household?
Posted: 10/07/2020

The attached file (Excel) provides the number of households in each group based on data from the Survey of Consumer Finances (SCF). To get the average household holdings for a given balance sheet item, simply divide the total value for a given group in a given quarter by the total number of households in that group in that quarter (from the attached file).

Q: Where do loans extended under the Paycheck Protection Program appear in the Financial Accounts?
Posted: 09/21/2020

The Small Business Administration (SBA) reported (SBA report) that, by June 30, 2020, $521.5B in loans had been approved under the Paycheck Protection Program (PPP). In the Financial Accounts, PPP loans appear on the balance sheets of both borrowers and lenders when they are disbursed and remain there until they are repaid, forgiven, or charged off by lenders. Lender data sources used in the Financial Accounts do not distinguish between PPP loans and other types of loans issued. Hence, PPP loans are included in total loans shown in "depository loans n.e.c" (if extended by depository institutions) and "other loans and advances" (if extended by other financial institutions).

As reported by the SBA, the vast majority of PPP loans were extended by U.S. chartered depository institutions. Consolidated Reports of Condition and Income for the U.S.-chartered depository institutions sector show a total of $482B in PPP loans outstanding. A small fraction of PPP loans were also extended by other financial institutions, such as credit unions, GSEs (farm credit), and finance companies.

On the borrowers' side, most PPP loans were extended to nonfinancial businesses, though a small fraction were extended to nonprofit organizations (which are included in our household and nonprofit organizations sector), and to financial companies.

Timely, high-frequency data is not available to precisely allocate loans across the two nonfinancial business sectors (corporate and noncorporate). Therefore, the BEA-estimated allocation of PPP-related subsides was used to assign roughly two-thirds of the $482B in PPP loans to the nonfinancial corporate sector and one-third to the nonfinancial noncorporate sector.

Q: What are PPP payables and receivables and how are they treated in the Financial Accounts?
Revised: 03/11/2021

A large fraction of Paycheck Protection Program (PPP) loans are expected to be forgiven under the terms of the program. BEA classifies PPP loans to businesses that are forgiven as subsidies (https://www.bea.gov/help/faq/1408), and PPP loans to nonprofit institutions as social benefit programs. In order to align with NIPA accrual treatment of PPP loan forgiveness, PPP payable liabilities were added to the federal government sector to account for the accrued liability to repay PPP loans in future periods, and are equal to loan forgiveness subsidies to businesses and current transfers to NPISH reported in NIPA. PPP receivable assets were added to the household and nonprofit organizations, nonfinancial corporate business, nonfinancial noncorporate business, and finance companies sectors. PPP payables and receivables are reported on the identified miscellaneous financial claims - part II tables (F.233 and L.233). Subsidies are allocated over several quarters, and will be revised to reflect the actual forgiven amounts as that information becomes available.

Q: How do the data in the Z.1 Balance Sheet of Domestic Hedge Funds table (B.101.f) differ from the Private Fund Statistics published by the Securities and Exchange Commission (SEC)?
Posted: 09/21/2020

The primary difference is that the hedge fund balance sheet reported in Table B.101.f of the Z.1 Financial Accounts only includes hedge funds domiciled in the United States. The Private Fund Statistics published by the SEC include all hedge funds that file Form PF, which includes offshore hedge funds.

Q: Does the Z.1 Balance Sheet of Domestic Hedge Funds table (B.101.f) include the whole universe of U.S. hedge funds?
Posted: 09/21/2020

The Z.1 Balance Sheet of Domestic Hedge Funds table includes the U.S. hedge funds that file Form PF, which is the great majority of U.S. hedge funds. However, very small hedge funds are not required to file Form PF and are therefore missing in the table. Also, commodity pools that elect to file Form PF as hedge funds are included in the table.

Q: Smaller hedge funds (non-qualifying hedge funds) file Form PF annually and are not required to disclose as much detail on their asset and liability sides as larger hedge funds (qualifying hedge funds). How do the non-qualifying hedge funds enter the Z.1 hedge funds table?
Posted: 09/21/2020

Non-qualifying hedge funds report their gross asset value and their total borrowings in Form PF Questions 8 and 12, respectively. Their gross asset values and total borrowings enter lines 1 and 20, respectively, in the Z.1 hedge funds table. They are then allocated to the asset and liability categories (lines 2-19 and 21-32) by assuming that the proportions are the same as for the qualifying hedge funds. For non-qualifying hedge funds that file Form PF annually, their gross asset values and total borrowings are filled forward for a maximum of three quarters.

Q: The asset side information of the Z.1 hedge funds table comes from Questions 26 and 30 of Form PF. For some asset categories, for example U.S. Treasury securities, the long exposure reported in Questions 26 and 30 includes the hedge fund's direct holding of the security but also the derivative exposure. Does the asset side in the Z.1 hedge funds table include derivative exposure?
Posted: 09/21/2020; Revised: 12/10/2020

The asset side of the Z.1 hedge funds table reflects the asset holdings excluding any derivative exposure. For asset categories in Questions 26 and 30 for which derivative exposure is included, that is, the U.S. Treasury securities and the corporate and foreign bonds, the holdings excluding derivative exposure are estimated in two steps. First, long exposures reported in Questions 26 or 30 in asset categories for which the derivative exposure is zero or likely small are subtracted from the hedge fund's gross asset value. These asset categories are: real estate, foreign currency, deposits, other cash and cash equivalents, money market funds, repos, agencies/GSEs, municipal securities, loans, corporate equities, investments in registered investment companies, investments in internal private funds, investments in external private funds, investments in funds for cash management purposes, and investments in other sub-asset classes. Second, the residual value is then allocated to US Treasury securities and corporate and foreign bonds based on the size of their respective long exposures reported in Questions 26 or 30.

Q: Why did the net worth of the nonfinancial corporate business sector revise significantly downward with the 2019:Q2 publication?
Posted: 09/20/2019

Various methodological improvements to the nonfinancial corporate business sector (tables F.103, L.103, B.103, and R.103) caused large revisions to the sector's total assets and liabilities with the 2019:Q2 Z.1 publication. The sector's net worth has been revised downward by $8.5 trillion in 2018 due to both a decrease in total assets ($2.6 trillion) and an increase in total liabilities ($5.8 trillion). The decline in total assets is mainly attributable to a correction in the treatment of intangible assets. Previously, intangible assets were incorrectly reported as both a nonfinancial asset (B.103, line 5) and as a component of total financial assets via their inclusion in other miscellaneous assets (part of B.103, line 25). Consistent with the Bureau of Economic Analysis' National Income and Product Accounts and international guidelines, the Financial Accounts now classify intangible assets only as a nonfinancial asset beginning in 2010:Q4, decreasing the sector's total financial assets by $3.2 trillion in 2018. Other changes affecting the calculation of assets include:

  • Reporting debt securities and U.S. direct investment abroad at market value beginning in 2010:Q4.
  • Estimating checkable deposits and currency using more complete data from the IRS Statistics of Income (SOI) beginning in 2010:Q4.
  • Improving the treatment of corporate farm data beginning in 2010:Q4.

The large upward revision to total liabilities can largely be attributed to two major changes. Other miscellaneous liabilities (part of B.103, line 38) are calculated residually by subtracting all known liabilities (from a variety of data sources) from total liabilities reported by the SOI. All component liabilities (including other miscellaneous liabilities) are then summed to calculate the sector's total liabilities (B.103 line 26). Our previous method for estimating other miscellaneous liabilities consisted of subtracting total foreign direct investment (FDI) in the U.S. (B.103 line 37) from the SOI total. This approach understated the size of other miscellaneous liabilities, as the equity portion of FDI is not included as a liability in the SOI. We now subtract only the non-equity portion of FDI (intercompany debt) from SOI total liabilities to estimate other miscellaneous liabilities. This change increased other miscellaneous liabilities, and therefore total liabilities, by $5.8 trillion in 2018. The bulk of the remaining increase in the sector's total liabilities is due to FDI now being reported at market value beginning in 1982:Q1.

The upward revision to liabilities on the corporate balance sheet brings the U.S. Financial Accounts into closer alignment with the international standards in the System of National Accounts 2008. Because the revised measure of liabilities represents a broader definition than is typically assumed on corporate balance sheets, we have adjusted the debt- and equity-to-net worth ratios shown on table B.103 (lines 43 and 45) to exclude the equity portion of FDI.

In addition to the previously mentioned changes, we estimated adjustments to offset increases in total assets due to the implementation of a change in GAAP accounting standards (ASC_842), beginning in December 15, 2018, that brought operating leases on the balance sheet; this represented a structural break rather than an economic transaction.

Q: Why did the State and Local defined benefit pension entitlements (liabilities) and claims of pension fund on sponsor (assets) dramatically revise up with the September 2018 release?
Posted: 10/03/2018

The Bureau of Economic Analysis (BEA) provides the source data for state and local defined benefit pension liabilities in the Financial Accounts. As part of its 2018 comprehensive revision, BEA changed its method for valuing state and local pension liabilities from an accumulated benefit obligation (ABO) method to a projected benefit obligation (PBO) method. With the September 2018 release, the Financial Accounts incorporated BEA's new PBO-based estimates of state and local defined benefit pension liabilities. This change in methodology resulted in a significant increase in the state and local pension liabilities shown in both the Financial Accounts and in this Enhanced Financial Accounts project. For more information, see BEA's Preview of the 2018 Comprehensive Update of the National Income and Product Accounts.

Q: Why did the level of foreign loans to U.S. corporate business almost double in 2018:Q2?
Posted: 10/02/2018

The jump in level is the result of improved reporting of collateralized loan obligations (CLOs) in the Treasury International Capital (TIC) data. We inserted a break of $235 billion in the series. The transaction component can be seen on table F.216, line 11, at a seasonally-adjusted, annual rate. For more information, please see footnote 2.d of the U.S. Department of the Treasury's resource center on U.S. Financial Firms' Liabilities to Foreign Residents at https://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticliab.aspx.

Q: Where can I find a list with all of the series that were added or renamed in the September 2018 Z1 release?
Posted: 09/24/2018

A comprehensive list of all code changes is available from the online Financial Accounts Guide (https://www.federalreserve.gov/apps/fof/CodeChange.aspx). Code changes for the September 2018 publication are also available as a separate text file (https://www.federalreserve.gov/releases/z1/20180920/code_changes.txt).

Q: What are the effects of the Tax Cuts and Jobs Act (TCJA) on the Financial Accounts' transactions?
Posted: 06/07/2018

The 2017 Tax Cuts and Jobs Act (TCJA) includes several provisions that impact statistics published in the Financial Accounts of the United States.

  • The TCJA imposes a one-time deemed repatriation tax on the foreign earnings of U.S. companies accumulated after 1986 until the end of the company's most recent fiscal year, regardless of whether accumulated foreign earnings are actually repatriated or not. BEA estimates the one-time repatriation tax at $1 trillion at an annual rate, and records it in the NIPAs as a net capital transfer from private businesses to the federal government in the fourth quarter of 2017. Table F.5 of the Financial Accounts shows the distribution of the net transfer between nonfinancial corporations ($830 billion) and financial corporations ($170 billion). We subsequently allocate the total capital transfer paid by financial corporations to the federal government between insurance companies, U.S.-chartered depository institutions, finance companies, and broker and dealers based on these sectors' respective shares of total U.S. direct investment abroad. In the Financial Accounts, the tax provision also results in an increase in taxes payable by the relevant sectors in the fourth quarter of 2017. These newly recorded taxes payable will be reduced on an ongoing basis by scheduled tax payments, with the estimated first tax payment expected to be recorded in the Financial Accounts in the second quarter of 2018.

  • BEA explains further effects of the TCJA on first quarter 2018 NIPA data. In particular, NIPA Table 4.1 shows an unusually large increase in net dividends received from the rest of the world by domestic businesses. BEA has indicated that these unusual transactions reflect the effect of changes in the U.S. tax law that eliminated taxes for U.S. multinationals on repatriated profits from their affiliates abroad. Accordingly, we estimate a large decline in U.S. direct investment abroad (table F.230) and a corresponding increase in other financial assets of the nonfinancial corporate and financial business sectors, proportional to their respective amount of U.S. direct investment abroad. The U.S. direct investment estimate is preliminary and will be updated in the September Financial Accounts publication to reflect BEA's upcoming release of U.S. International Transactions and International Investment Position data for the first quarter. The Financial Accounts' estimates of financial assets held by businesses are based on incomplete data and are therefore also preliminary. We will refine these estimates as we get more data, including Statistics of Income data for nonfinancial corporate businesses, which are available with a significant lag.
Q: Why is there a large increase in total municipal securities outstanding in 2004:Q1?
Posted: 04/06/2018

The approximately $800 billion increase in total municipal securities outstanding in 2004:Q1 is almost entirely due to the introduction of more complete data obtained from Mergent, a private data vendor. In the December 8, 2011 publication, data from Mergent was incorporated into the Financial Accounts to estimate municipal securities outstanding and net issuance for state and local governments, nonprofit organizations, and nonfinancial corporate business (industrial revenue bonds). Previous estimates relied on a perpetual inventory approach that added net issues (gross issues adjusted for retirements) to the previous period’s amount outstanding. This method underestimated the amount outstanding, perhaps because the original data source reported an initial level that was too low. The new estimates based on Mergent’s data show much higher levels of outstanding municipal securities. Revisions to the municipal securities series were carried back to 2004:Q1, the first period for which the Mergent data is available. All of the increase is allocated to the household and nonprofit organizations sector, which is the residual holder of municipal securities in the Financial Accounts. In the Financial Accounts, level shifts due to data source changes are recorded in the "other changes in volume" series, which are prefixed with "FV". Other changes in volume series can be downloaded from the Data Download Program with the "build your package" option (https://www.federalreserve.gov/datadownload/Choose.aspx?rel=Z.1).

Q: Why was nonfinancial closely held corporate business equity revised by approximately -160B for each quarter between 2016Q4 and 2017Q3?
Posted: 03/08/2018

On September 7, 2016 Dell acquired EMC corporation and began trading as Dell Technologies (DVMT). Dell was subsequently removed from the 2017 Forbes list of Largest Private Companies, which serves as the underlying data source for valuing C corporations. The updated 2017 Forbes was not incorporated until this quarter's (2017Q4) publication, resulting in a downward revision for all quarters where Dell Technologies was erroneously included in the value of nonfinancial C corporations.

Q: How are exchange traded funds (ETFs), closed-end funds (CEFs), and real estate investment trusts (REITs) treated in the Financial Accounts of the United States?
Posted: 10/18/2017

In the Financial Accounts of the United States, ETF, CEF and REIT investment companies are treated as separate sectors, while shares issued by these investment companies are included in the corporate equities instrument category. ETFs, CEFs and REITs are types of investment companies that raise funds from investors to purchase financial and nonfinancial assets. In exchange, these investment companies issue shares to investors that can be traded intraday on stock exchanges at market prices. These investment companies, as well as mutual funds companies, are treated as sectors in the Financial Accounts which hold assets, make transactions, and incur liabilities or outstanding share issuance (see sector flow and level tables F.122/L.122 mutual funds, F.123/L.123 CEFs, F.124/L.124 ETFs, and F.129/L.129 REITs). Ideally shares issued by investment companies would be treated as separate instrument types that other sectors in the economy hold as assets and transact on. This is the case for mutual funds shares since most sectors report holdings and transactions of mutual funds shares on financial statements (see tables F.224 and L.224). However, most sectors do not report ETF, CEF and REIT shares separately from other types of shares on financial reporting forms. They are often reported grouped together with other types of equity shares or as miscellaneous assets. Due to this data limitation, ETFs, CEFs and REITs share issuance is grouped with corporate equity share issuance and is shown on table F.223. Therefore, total corporate equity outstanding shown on line 1 of table L.223 includes ETF, CEF and REIT shares outstanding.

Q: If Exchange-traded fund (ETF) shares are included in total issues of corporate equities shown on line 1 of L.223, are the underlying equity shares held by ETF companies being double counted; once for the issuance of the underlying equity shares and once again for the issuance of ETF shares? What about on the holdings side?
Posted: 10/18/2017

No, the inclusion of ETF shares in the corporate equity instrument category does not cause us to double count the issuance of the underlying corporate equity shares. The concern about double counting may arise from the fact that ETF investment companies can both issue equity shares and hold corporate equity shares that are issued by other sectors. While the value of ETF shares is derived, in part, from the value of the corporate equity held by the ETF company, the ETF shares are distinct from the underlying corporate equity shares issued by other sectors and must be accounted for separately (note that the value of some ETF shares is based on underlying debt securities). While it would be preferred to show this type of pass through activity by ETF companies separately in the Financial Accounts, as is the case with the treatment of the mutual funds sector (L.122 and F.122) and mutual funds instrument category (L.224 and F.224), it is necessary to include issuance of ETF shares by ETF companies together with issuance of other corporate equity shares by other sectors due to data limitations mentioned in the related technical Q&A which describes the treatment of ETFs.

On the holdings side, one might be concerned that the household sector’s holdings of corporate equities, which are residually calculated, may be overstated on L.223 because corporate equity shares include both ETF shares and shares issued by other sectors that underlie the value of those ETF shares. However, because any corporate equity held by ETF companies is recorded on the holdings side, the underlying equity is accounted for only once. As a result, the household sector’s holdings of corporate equities are not distorted by the inclusion of ETF shares in the corporate equities instrument category. The same treatment and accounting that applies to ETFs also applies to closed-end funds.

Q: What were the revisions to the mutual fund sector introduced with the June 9, 2016 release of the Z.1 Financial Accounts of the United States?
Posted: 06/17/2016

In the June 9, 2016 publication there were several revisions to mutual funds data. The main changes include:

  1. Variable annuity mutual funds, which were previously included as corporate equities in the life insurance sector, are now included in the mutual fund sector (see the 2016:Q1 Z.1 release highlights for more details www.federalreserve.gov/apps/fof/FOFHighlight.aspx).
  2. Mutual funds' holdings of debt securities are now reported at market value rather than at book value.
  3. The methodology for computing net flows into assets held by mutual funds was updated (see the online Financial Accounts Guide at www.federalreserve.gov/apps/fof/ for details).

The inclusion of variable annuity mutual funds increased the value of assets held by mutual funds. At the same time, levels of debt securities held by the mutual fund sector were substantially lower than the value of debt securities previously reported, as explained in the answer to the next question. Generally, the two changes had offsetting effects on the total value of assets in mutual funds in 2016:Q1, but altered the composition of mutual fund portfolios by lowering the value of debt securities and raising the value of corporate equities.

Q: Why were debt securities held by mutual funds revised down by such a large amount in the June 9, 2016 release of the Z.1 Financial Accounts of the United States?
Posted: 06/17/2016

Given that the mutual fund sector was expanded to include variable annuity mutual funds, one might have expected the outstanding amount of long-term debt securities held by mutual funds to be revised up in the June 9, 2016 publication. Instead, the levels of long-term debt securities (including U.S. government bonds, municipal bonds, and corporate and foreign bonds) held by mutual funds were revised down by a substantial amount.

The large downward revision to mutual funds' holdings of bonds is due to an improvement to our previous perpetual inventory method for estimating the book levels of bonds in the mutual fund sector, which did not fully account for retirements, and therefore overstated the value of bonds, particularly since 2012. The move to market-value reporting of bonds had relatively little effect on our estimates compared with the difference between the old and new book value measures. Hence, the bond levels reported now are lower than previously published levels, especially in recent years.

Note that although the total level of U.S. government bonds was revised down, the share of total U.S. government bonds allocated to Treasury securities was revised up due to major revisions in source data from the Center for Research in Security Prices' CRSP Survivor-Bias-Free U.S. Mutual Fund Database.

Q: Did the mutual fund sector revisions in the June 9, 2016 release of the Z.1 Financial Accounts of the United States affect other sectors?
Posted: 06/17/2016

Yes, several sector tables in the Financial Accounts are affected by the revisions to the mutual fund sector. Variable annuity mutual funds were previously accounted for as corporate equity on the life insurance, tables but are now included in the mutual fund holdings of life insurers. As a result, table L.116 now shows significantly lower levels of corporate equity and substantially higher levels of mutual fund holdings. On the household balance sheet, B.101, the holdings of mutual funds are now substantially lower than previously published estimates, while the holdings of corporate bonds, agency securities, and municipal securities are higher.

The asset composition of certain pension sectors were affected by a change in our treatment of CREF, a variable annuity mutual fund. Previously, the financial instruments underlying CREF mutual funds were shown on the state and local government employee defined contribution retirement fund tables (F.120.c and L.120.c) and the private defined contribution pension plan tables (F.118.c and L.118.c). With the mutual fund revision, the underlying financial instrument detail for CREF is no longer shown on the pension tables; instead, aggregate CREF assets are now shown as mutual fund holdings on the pension tables.

Q: Data on large publicly traded corporations indicate that their debt growth from 2011 onwards has been much larger than that of the nonfinancial business sector. Can you help explain this gap?
Posted: 05/26/2016

Data from the Financial Accounts indicate that the debt of the nonfinancial business sector grew by 30% from 2010Q4 to 2015Q4. In comparison, data on the largest 3000 nonfinancial firms in Compustat indicate that their debt grew by around 80% over this period. Measured in percentage points, the proportion of the debt owed by the largest 3000 firms as a share of nonfinancial business debt has increased over this period from around 27% in 2010Q4 to 37% in 2015Q4.

This difference reflects, in part, the fact that over this period, much of the growth in debt has come from corporate bonds and other debt instruments that are mostly issued by large corporations, as these firms took advantage of supportive market conditions to issue debt. By contrast, there has been little growth in bank loans to small firms and in mortgages to noncorporate businesses over this period.

Q: Why is the discrepancy so large for Monetary Authority in 2015:Q4?
Posted: 03/10/2016

The monetary authority discrepancy is calculated as the difference between gross saving and gross investment. As of December 4, 2015, the Fixing America's Surface Transportation Act (FAST) limits the Federal Reserve Bank aggregate surplus amount to $10 billion. Any excess surplus is to be remitted to the United States Treasury Department. In compliance with FAST, a 2015:Q4 payment of approximately $19.3 billion to the U.S. Treasury was necessary to reduce the aggregate Reserve Bank surplus. This surplus payment is recorded as an increase in deposits in the Treasury general deposit account (table F.109, line 35) which, in turn, increased the sector discrepancy.

Further information can be found at the following link: http://www.federalreserve.gov/releases/h41/20151231/

Q: Why is the level of total debt outstanding in the September 18, 2015 release of the Z.1 Financial Accounts of the United States so much higher than it was in the previous Z.1 release?
Posted: 10/09/2015

Total debt outstanding was revised upwards due to methodology changes to both Treasury securities and security credit. Total debt outstanding is now the sum of two new instrument categories: debt securities (table L.208) and loans (table L.214). The aggregate of these instrument categories was previously called credit market instruments (see the 2015:Q2 Z.1 release highlights: http://www.federalreserve.gov/apps/fof/FOFHighlight.aspx).

Treasury securities, part of the debt securities instrument category, now include nonmarketable Treasury securities held by federal government defined benefit retirement plans (FL343061145). The inclusion of federal government defined benefit retirement plans resulted in an upward revision to the level of federal government debt of about $1.408 trillion for 2014:Q4. See the published FEDS Note "Federal Government Defined Benefit Retirement Plans" for more details http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/federal-debt-in-the-financial-accounts-of-the-united-states-20151008.html.

In the domestic financial sector, borrowing previously classified as security credit liabilities (see release highlights) are now included as part of loans for the securities brokers and dealers sector. These are: (1) U.S.-chartered depository institutions loans for purchasing or carrying securities (FL763067003); (2) foreign banking offices in the U.S. loans for purchasing or carrying securities (FL753067003); and (3) Households and nonprofit organizations cash accounts at brokers and dealers (FL153067005). The revision to broker dealer debt for 2014:Q4 was roughly $962 billion.

Similarly, borrowing previously classified as security credit liabilities of the household sector are now classified as loan liabilities. Margin accounts at brokers and dealers (FL663067003) are now included in the household sector's other loans and advances instrument category. This change resulted in an upward revision of $370 billion to the outstanding amount of household sector loans for 2014:Q4.

The total revision to the level of debt outstanding (debt securities plus loans) due to these methodology changes is approximately $2.74 trillion 2014:Q4.

Prior to the September 18, 2015 Z.1 release of the Financial Accounts of the United States, "total credit market instrument" assets and liabilities by sector could be found on tables L.1 and F.1. These tables have been eliminated from the Financial Accounts, along with the usage of the term "credit market instruments". The equivalent data series are available by combining corresponding line items from the two new instrument tables: debt securities (L.208) and loans (L.214). Additionally, a list of the aggregated debt securities and loans series can be found in the Technical Q&A on September 18, 2015 release table changes: "In the September 18, 2015 release of the Z.1 Financial Accounts of the United States, some tables in the summary section on credit market instruments seem to have disappeared. What happened to these tables and where can I find the equivalent data series?"

Q: In the September 18, 2015 release of the Z.1 Financial Accounts of the United States, some tables in the summary section on credit market instruments seem to have disappeared. What happened to these tables and where can I find the equivalent data series?
Posted: 10/09/2015

With the September 18, 2015 Z.1 release, the classic presentation of the instrument category "credit market instruments" has been discontinued and replaced with two new instrument categories, "debt securities" and "loans".  Reporting debt securities and loans separately brings the Financial Accounts more in line with the international standards for national accounts. The debt securities instrument includes open market paper, Treasury securities, agency- and GSE-backed securities, municipal securities, and corporate and foreign bonds. The new loans instrument includes depository loans not elsewhere classified, other loans and advances, mortgages, and consumer credit. Together, debt securities plus loans include all of the financial assets or liabilities previously included in credit market instruments. While the underlying instrument categories that make up the sum of debt securities and loans are the same as those in old "credit market instruments" concept, changes to a few of these categories make the new sum of debt securities and loans larger than in previous publications.  For more details on these revisions please see the Technical Q&A on revisions to total debt: "Why is the level of total debt outstanding in the September 18, 2015 release of the Z.1 Financial Accounts of the United States so much higher than it was in the previous Z.1 release?"

This change has had three major impacts on the table structure of the publication: (1) summary tables focusing on "credit market instruments" have been eliminated; (2) remaining summary tables have been renumbered; and (3) new instrument tables for debt securities (tables F.208 and L.208) and loans (tables F.214 and L.214) have been created. 

For the most part, combining line items from the new debt securities tables with the corresponding line items on the new loans tables will yield the equivalent concept as the old credit market instruments. A complete list of table changes, including deletions and renumbering, with notes describing how to find line items from eliminated tables in the current publication can be found at the end of this Technical Q&A. Additionally, series for the sum of debt securities and loans, referred to as "debt," are still available, some of which appear on tables D.1, D.2 and D.3 (D.3 shows seasonally adjusted levels). Debt series for sectors that do not appear on table D.1, D.2 or D.3 are available from the DDP (http://www.federalreserve.gov/datadownload/Choose.aspx?rel=Z.1) "build your package" option using the "Z.1 Underlying Detail" data set selection (unless otherwise noted below). Please note that "Z.1 Underlying Detail" is available up to 72 hours after the main publication release. A table of total debt series mnemonics by sector is shown below. Please note, some sectors only borrow/lend through debt securities or loans, not both.

Debt securities and loans; liabilities; by sector:

FL894104005 All sectors; debt securities and loans; liability

FL154104005 Households and nonprofit organizations; debt securities and loans; liability

FL144104005 Nonfinancial business; debt securities and loans; liability

FL104104005 Nonfinancial corporate business; debt securities and loans; liability

FL114123005 Nonfinancial noncorporate business; loans; liability (Financial Accounts data set)

FL364104005 General government; debt securities and loans; liability

FL214104005 State and local governments, ex. employee retirement funds; debt securities and loans; liability

FL314104005 Federal government; debt securities and loans; liability

FL704104005 Private depository institutions; debt securities and loans; liability

FL413065005 Agency-and GSE-backed mortgage pools; total mortgages; asset (Financial Accounts data set)

FL404104005 Government-sponsored enterprises; debt securities and loans; liability

FL614104005 Finance companies; debt securities and loans; liability

FL543169373 Life insurance companies, general accounts; FHLB advances; liability (Financial Accounts data set)

FL674122005 Issuers of asset-backed securities; debt securities; liability (Financial Accounts data set)

FL644104005 Real estate investment trusts; debt securities and loans; liability

FL664104005 Security brokers and dealers; debt securities and loans; liability

FL734104005 Holding companies; debt securities and loans; liability

FL504104005 Funding corporations; debt securities and loans; liability

FL264104005 Rest of the world; debt securities and loans; liability

Debt securities and loans; assets; by sector:

FL384004005 Domestic nonfinancial sectors; debt securities and loans; asset

FL154004005 Households and nonprofit organizations; debt securities and loans; asset

FL144004005 Nonfinancial business; debt securities and loans; asset

FL104004005 Nonfinancial corporate business; debt securities and loans; asset

FL114004005 Nonfinancial noncorporate business; debt securities and loans; asset

FL314004005 Federal government; debt securities and loans; asset

FL214004005 State and local governments, excluding employee retirement funds; debt securities and loans; asset

FL794004005 Domestic financial sectors; debt securities and loans; asset

FL704004005 Private depository institutions; debt securities and loans; asset

FL764004005 U.S.-chartered depository institutions; debt securities and loans; asset

FL744004005 Banks in U.S.-affiliated areas; debt securities and loans; asset

FL754004005 Foreign banking offices in the U.S.; debt securities and loans; asset

FL474004005 Credit unions; debt securities and loans; asset

FL584004005 Insurance companies and pension funds; debt securities and loans; asset

FL634022005 Money market mutual funds; debt securities; asset (Financial Accounts data set)

FL644004005 Real estate investment trusts; debt securities and loans; asset

FL554022005 Closed-end funds; debt securities; asset (Financial Accounts data set)

FL564022005 Exchange-traded funds; debt securities; asset (Financial Accounts data set)

FL654004005 Mutual funds; debt securities and loans; asset

FL674004005 Issuers of asset-backed securities; debt securities and loans; asset

FL614004005 Finance companies; debt securities and loans; asset

FL504004005 Funding corporations; debt securities and loans; asset

FL734004005 Holding companies; debt securities and loans; asset

FL664004005 Security brokers and dealers; debt securities and loans; asset

FL714004005 Monetary authority; debt securities and loans; asset

FL424004005 Government-sponsored enterprises and federally related mortgage pools; debt securities and loans; asset

List of table changes:

Renamed: D.1 Credit Market Debt Growth by Sector to: D.1 Debt Growth by Sector

  • Methodology change resulting in upward revision to debt (see Technical Q&A on revisions to total debt)

Renamed: D.2 Credit Market Borrowing by Sector to: D.2 Borrowing by Sector

  • Methodology change resulting in upward revision to debt (see Technical Q&A on revisions to total debt)

Renamed: D.3 Credit Market Debt Outstanding by Sector to: D.3 Debt Outstanding by Sector

  • Methodology change resulting in upward revision to debt (see Technical Q&A on revisions to total debt)

Deleted: F.1 Total Credit Market Borrowing and Lending

  • "Credit market borrowing" line items on the old table can be found by combining total liability items from new tables F.208 Debt securities and F.214 Loans.
  • "Credit market lending" line items on the old table can be found by combining total assets items from new tables F.208 Debt securities and F.214 Loans.

Deleted: F.2 Credit Market Borrowing by Nonfinancial Sectors

  • "By instrument" line items on the old table can be found on table F.100 Domestic Nonfinancial Sectors as debt securities and loans liabilities.
  • "By sector" line items on the old table can be found by combining total liability items from new tables F.208 Debt securities and F.214 Loans.

Deleted: F.3 Credit Market Borrowing by Financial Sectors

  • "By instrument" line items on the old table can be found on table F.108 Domestic Financial Sectors as debt securities and loans liabilities.
  • "By sector" line items on the old table can be found by combining total liability items from new tables F.208 Debt securities and F.214 Loans.

Deleted: F.4 Credit Market Borrowing, All Sectors, by instrument

  • Line items can be found by combining "by instrument" items from new tables F.208 Debt securities and F.214 Loans.
  • Memo line items can be found on table F.223 Corporate Equities or table F.224 Mutual Fund Shares.

Deleted: F.5 Net increase in Liabilities and Its Relation to Net Acquisition of Financial Assets

  • Individual line items can be found in a number of places, but the most comprehensive view can be found on the Flow of Funds All Sectors -- Flows Matrix.
  • "Liabilities not identified as assets" and "Floats not included in assets" are included in the "instrument discrepancy" column of the Flow of Funds Matrix.

Deleted: L.1 Credit Market Debt Outstanding

  • "Total credit market debt owed by" line items on the old table can be found by combining total liability items from new tables L.208 Debt securities and L.214 Loans.
  • "Total credit market assets held by" line items on the old table can be found by combining total assets items from new tables L.208 Debt securities and L.214 Loans.

Deleted: L.2 Credit Market Debt Owed by Nonfinancial Sectors

  • "By instrument" line items on the old table can be found on table L.100 Domestic Nonfinancial Sectors as debt securities and loans; total liabilities.
  • "By sector" line items on the old table can be found by combining total liability items from new tables L.208 Debt securities and L.214 Loans.

Deleted: L.3 Credit Market Debt Owed by Financial Sectors

  • "By Instrument" line items on the old table can be found on table L.108 Domestic Financial Sectors as debt securities and loans liabilities.
  • "By sector" line items on the old table can be found by combining total liability items from new tables L.208 Debt securities and L.214 Loans.

Deleted: L.4 Credit Market Debt, All Sectors, by Instrument

  • Line items can be found by combining "by instrument" items from new tables F.208 Debt securities and F.214 Loans.
  • Memo line items can be found on table L.223 Corporate Equities or table L.224 Mutual Fund Shares.

Deleted: L.5 Total Liabilities and Its Relation to Total Financial Assets

  • Individual line items can be found in a number of places, but the most comprehensive view can be found on the Flow of Funds All Sectors -- Assets and Liabilities Matrix.
  • "Financial assets not identified as liabilities," "Liabilities no identified as assets," and "Floats not included in assets" are included in the "instrument discrepancy" column of the Flow of Funds All Sectors -- Assets and Liabilities Matrix

Renumbered: F.6 Distribution of Gross Domestic Product as table F.2 Distribution of Gross Domestic Product

Renumbered: F.7 Distribution of National Income as table F.3 Distribution of National Income

Renumbered: F.8 Saving and Investment as table F.4 Saving and Investment

Renumbered: F.9 Net Capital Transfers as tableF.5 Net Capital Transfers

Renumbered: F.10 Derivation of Measures of Personal Saving as table F.6 Derivation of Measures of Personal Saving

Renumbered: L.10 Assets and Liabilities of the Personal Sector as table L.6 Assets and Liabilities of the Personal Sector

Q: Can you provide some detail on the changes in the Nonfinancial Corporate Business tables (F.102, L.102 and B.102) in the 2014 Second Quarter Z.1 publication?
Posted: 09/19/2014

We incorporated new data on corporate bond retirements from the Mergent Fixed Income Securities Database into the publication. This new data indicated that we have previously been understating corporate bond retirements, leading us to overstate net issuance of corporate bonds. As a result of this data revision, we have revised net corporate bond issuance (line 43 of F.102) from 1995Q2 onwards.

We calculate the level of corporate bond issuance as the level outstanding during the previous quarter plus net issuance during the current quarter. As such, the revision to the net issuance series also resulted in a revision to the level of corporate bonds (line 26 of L.102).

The other miscellaneous liabilities series (line 36 of L.102) are calculated residually as total liabilities (line 22 of L.102) minus the identified liabilities. As such the revision to the level of corporate bonds lead to an offsetting revision to the level of other miscellaneous liabilities.

We have revised the method used to measure gross equity issuance to incorporate additional data from Compustat. As a result of this data, we have revised the net new equity issuance series from 2002Q1 onwards. The market value of equities outstanding (line 39 of B.102) is calculated using separate data sources, and as such, this series is unchanged.

We have also moved U.S. direct investment abroad (line 22 of B.102) and Foreign direct investment in U.S. (line 34 of B.102) to their own data lines. Previously, they had been included as part of Miscellaneous assets and liabilities, respectively.

Q: When a corporate business acquires a partial ownership stake in another publicly or privately held corporation, is this operation recorded in the "other miscellaneous assets" in the flows and levels tables?
Posted: 05/07/2014

A corporation taking a partial ownership stake in another corporation is considered an "inter-corporate holding," and as such, should be excluded from the nonfinancial corporate business sector. However, due to data limitations, we have little information on this type of transaction, and it is likely that the measure of inter-corporate holdings we exclude in the Financial Accounts understates the true value of such holdings. As other miscellaneous assets are calculated residually in F.102 and L.102, this measurement problem with inter-corporate holdings likely causes the reported other miscellaneous assets series to be higher than what it should be.

Q: When a corporate business buys back its own equity, does the difference between the market price it pays and the historical cost appear as goodwill in the other miscellaneous assets flows and levels tables?
Posted: 05/07/2014

When a corporation buys back its own equity with cash, the entire amount of the transaction is recorded as an equity retirement. This transaction is not counted as goodwill, nor does it appear in the other miscellaneous assets series.

Q: When a corporate business buys all the equity of another publicly or privately held corporation, how is this registered in the "net equity issuance" series in the flows table?
Posted: 05/07/2014

The recording of this transaction depends on the method of payment. If a corporation buys the equity of another corporation using its own equity, the transaction has no effect on net equity issuance, as the value of the equity retired in the target corporation is offset by an equal value of issuance by the acquirer. This reflects the fact that there is no cash exchanged in the transaction. However, if the acquirer paid in cash, the value of the transaction would show as a negative item in net equity issuance offset by a decline in cash holdings.

Q: How do hedge fund assets of U.S. households show up on the household balance sheet in the Financial Accounts?
Posted: 02/26/2014

The answer depends on whether the hedge fund is onshore (domestic) or offshore (foreign). The following answer is also predicated on the assumption that all transactions are carried out through U.S. brokers.

Onshore: If the hedge fund is domestic (located in the U.S.) then it is easiest to think of them as being consolidated on the household balance sheet (like nonprofits). That is, the household balance sheet will pick up the portfolio holdings of hedge funds in bonds, stocks and any other financial instruments held by the hedge fund, but those holdings cannot be distinguished from direct household holdings of those financial instruments.

Offshore: If the hedge fund is located offshore (like in the Cayman Islands), then the hedge fund itself is part of the rest of the world sector. That is, purchases of U.S. stocks and bonds by an offshore hedge fund would show up in our estimate of net purchases of U.S. stocks and bonds by the rest of the world (thereby reducing U.S. households' direct holdings of those assets). These data on portfolio holdings are collected for the balance of payments statistics by surveying transactions of U.S. brokers/dealers.

If a U.S. household purchases a share of an offshore hedge fund, then it should show up in the data as an issuance of equity by the rest of the world, and therefore, by the residual calculation, it flows through as a purchase of equity by the household sector. This is clearly not ideal; we would much rather have a sector "hedge funds", which--like mutual funds--holds financial assets and issues hedge fund shares that are then held by the household sector and other institutional sectors that are reportedly participating in the market. However, including foreign hedge funds in equity holdings is probably better than missing them altogether.

Caveats/Concerns: Because the data collection process relies on brokers, the financial accounts do not include transactions in offshore hedge funds that do not involve brokers. For example, if a high net worth household bypasses a broker and buys a hedge fund share directly from the offshore hedge fund, then we would presumably not see the issuance of the hedge fund share in equity issuance by the rest of the world (and therefore, the purchase would not be on the household balance sheet). However, if that same hedge fund used a broker to buy U.S. assets, those assets would still be in the rest of the world sector, thereby reducing the assets held on the household balance sheet.

Similarly, any domestic hedge funds that are purchased by foreigners would show up in net purchases of U.S. equity by the rest of the world. However, because equity issuance measured in the U.S. does not include hedge funds, these purchases would distort downward U.S. households' direct equity holdings.

In addition, the level of foreign equity (ROW liability) is calculated based on a perpetual inventory calculation which moves the level forward with price changes based on a foreign equity index (which should not include hedge funds) as well as the flow of equity (which should include the hedge fund issuance by the rest of the world).

Q: How is the Securities Data Corporation (SDC) bond data used to calculate series FA103163003.Q in the Flow of Funds data set? Which categories of the SDC bond data do you focus on, and what are you using as a filter?
Posted: 03/07/2013

For the Flow of Funds data, we use SDC to track bonds of nonfinancial U.S. firms issued in U.S. and foreign markets. A firm is a U.S. firm if issuing subsidiary's domicile is the United States. We include both convertible and non-convertible debt issues but exclude medium-term notes (MTNs), Certificates of Deposit, Bank Notes, and government and agency bonds. MTN net issuance is tracked using a separate data source.

Q: I have been looking at the Flow of Funds report Table F.212 - Net Issues and have some questions how the SDC Bond database is used.
Posted: 03/07/2013; Revised: 04/05/2013

The SDC Bond data from CM is used only to calculate 103163003 (corporate sector) issuance.

  1. Do you filter the SDC database on U.S.-owned corporates targeting U.S. markets, or do you filter on all (no matter if they are primarily owned by another country) corporate targeting U.S. markets?
    1. We filter the SDC database on U.S.-owned corporates targeting U.S. and foreign markets, with the domicile determined by the issuing subsidiary's domicile.
  2. Do you use the SDC database for Financial Companies?
    1. No, the financial sectors bond issuance series are not from the SDC data.1
  3. What sectors in SDC do you classify as 'Financial' (if you use SDC) and 'Non-Financial'?
    1. We use the Standard Industrial Classification (SIC) code of the issuer (not the parent) to distinguish between financial and non-financial firms. (http://www.osha.gov/pls/imis/sic_manual.html)
  4. What instruments do you consider to be asset-backed securities (ABS)?
    1. We only use the SDC bond data from Capital Markets to calculate 103163003 (corporate sector) issuance, so since this is nonfinancial data, it does not include ABS.1
  5. How are the maturity dates handled when using SDC?
    1. We do not filter out any issues based on time to maturity.
  6. How is Depository Trust and Clearing Corporation (DTCC) used
    1. DTCC is used for MTN net issuance data.

1. The answers to questions 2 and 4 originally suggested that the Flow of Funds Accounts excluded financial bonds. The text has been updated to say that the Flow of Funds Accounts do contain financial bonds, but the SDC bond data from Capital Markets is used only for the "Nonfinancial corporate business" line of table 212, which only includes nonfinancial bonds.

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Last Update: March 7, 2024